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CHAPTER ONE: INTRODUCTION

1.1 INTRODUCTION

1.2 ORIGIN OF THE REPORT

1.3 SCOPE OF THE REPORT

1.4 OBJECTIVE OF THE REPORT

1.5 METHODOLOGY OF THE REPORT

1.6 LIMITATION OF THE REPORT

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1.1 INTRODUCTION

Since the establishment of Social Islami Bank Limited has come forward as a private

commercial bank and very encourage has come forward as the stimulator of economic

activities in the country. The bank has been entrusted with the responsibility

of undertaking various steps related to the development of the country’s commercial,

industrial and agricultural sectors. The banking sector of a country is called the

economic barometer of the country. As a pioneer commercial bank in the private

sector in Bangladesh, Social Islami Bank provides considerable financial helps to the

business sector that imports industrial goods and exports excess production outside

the country for profit. Thus for imports the Social Islami Bank provides LIM (Loan

against Import Merchandise) and LTR (Loan against Trust Receipt) facility and for

exports provides both pre shipment and post shipment finances. Thus with these bank

helps the prospects in the business sector has increased more than ever before

1.2 ORIGIN OF REPORT

As a part of the Bachelor of Business Administration (BBA) course requirement, it is

a 3 months long internship program to introduce the students with the real life

business administration. I took the internship with Social Islami Bank Limited which

stands a prominent name in banking industry. I am proud to work as an internee with

SIBL and this experience will surely help me in my future career. This advance

working report has been prepared as a part of the Internship Program. Being an intern

the main challenge was to translate the theoretical concepts into real life experience.

The internship program and the study have following purposes:

• To experience the real business world.

• To compare the real scenario with the lessons learned at National University.

• To fulfill the requirement of BBA Program.

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1.3 SCOPE OF THE REPORT

In my internship period, the scope of the work was as vast as I was assigned to work

in every departments of the bank in Halishahar Branch, I have tried to observe and

understand the all banking activities especially general banking activities and other

day to day functions perform in this branch. I also tried to understand different topic

from the bank personnel.

1.4 OBJECTIVE OF THE REPORT

My entire analysis is based on achieving certain objectives as my analysis was also

directed to some particular targets.

The main objective of this study is to practically understand my theoretical

knowledge about Banking activities and there different types of Product,

Scheme, Service and Procedure of SIBL

The other objective of this report is –

To present an over view of Social Islami Bank Limited.

To know their Product and Service.

To evaluate the general banking activities of SIBL.

To identify problems related to general banking and investment activities of

SIBL.

To recommend suggestion for the development of SIBL.

1.5 METHODOLOGY OF THE REPORT

In order to make the Report more meaningful and presentable, this source of data and

information has been used widely.

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Sources of Data /Information

Primary sources

Face-to-face conversation with the respective officers and staffs of the Branch.

Informal conversation with the clients.

Observing banking activities for three month.

Secondary sources

Annual Report of SIBL.

Periodicals published by Bangladesh Bank.

Various book, articles, compilations etc.

Prior research reports and Website Information.

1.6 LIMITATION OF THE REPORT

After completing the internship experience, practical performances in the formal stage

become difficult. So in performing this report my lack of proper knowledge greatly

influenced in this performance. Those limiting factors that hampered my smooth

workings in bank and finally in preparing this report are as following:

The organization maintains strict confidentiality about their financial and other

information. They are afraid of any type of information leakage to their

competitors. So there was always difficulty to have appropriate information

from them.

Large scale analysis is not possible due to constraints & restrictions posted by

the banking authority

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Duration of the study was too short to have a sound understanding of the

overall banking.

This study completely depended on official records and annual reports

Lack of sufficient books, papers and journals etc

In many cases, up to date information may not be available.

SIBL, Halishahar branch is a small branch and their concentration is very

small area, so I can’t gather more information.

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CHAPTER TWO: AN OVERVIEW OF

SOCIAL ISLAMI BANK LIMITED (SIBL)

2.1 HISTORICAL BACKGROUND OF SOCIAL ISMAIC BANK

LIMITED (SIBL)

2.2 AN OVERVIEW OF THE BANK

2.3 MEANING OF ISLAMIC BANKING

2.4 JOURNEY WITH NEW LOGO

2.5 CORPORATE PROFILE

2.6 MISSION OF SIBL

2.7 VISION OF SIBL

2.8 SLOGAN OF SOCIAL ISLAMI BANK LIMITED

2.9 BRANCHES OF SOCIAL ISLAMI BANK LIMITED

2.10 CORE VALUES OF SIBL

2.11 ETHICAL PRIENCIPAL OF SIBL

2.12 STRATEGIC OBJECTIVES

2.13 COMMITMENTS OF SIBL

2.14 FUNCTION OF SIBL

2.15 OVERALL OPERATION GOALS

2.16 CORPORATE STRUCTURE

2.17 DEPARTMENT OF SOCIAL ISLAMI BANK LIMITED

2.18 MANAGEMENT STRUCTURE OF SIBL

2.19 ISLAMIC BANKING DEVELOP IN BANGLADESH

2.20 ISLAMIC BANKING AROUND THE WORLD

2.21 CAPITAL PATTERN OF SIBL

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2.1 HISTORICAL BACKGROUND OF SOCIAL ISMAIC BANK

LIMITED (SIBL)

Social Islami Bank Limited (SIBL) is a banking company registered under the

companies Act 1994 with its head office in 15 Dilkusha C/A, Dhaka-1000. The bank

operates as a scheduled bank under a banking license issued by the Bangladesh Bank,

Central Bank of the country. The Bank started its operation from 22, November 1995.

SIBL is a capitalized new generating Bank with an authorized capital and paid up

capital of Taka 7,031,415,640 million in 2014 and also 7,031,415,640 million

respectively as 2013. Currently the bank has 111 branches of which 49 in Dhaka, 33

in Chittagong, 4 in Sylhet, 12 in Khulna, 8 in Rajsahi, 1 in Barisal, and 4 in Rangpur.

The bank undertakes all types of banking transaction to support the development of

trade and commerce in the country. SIBL services are also available for the

entrepreneurs to set up new venture and BMRE of industrial units. To provide

clientele services in respect of international trade it has established wide corresponded

banking relationship with local and foreign banks trade and financial interest home

and abroad. Since the very inception, Social Islami Bank Ltd. is working with the

philosophy of serving the nationals as an ideal and unique financial house. Every

organization has some objectives of its own. The prime objective of Social Islami

Bank Ltd. is to earn profit throw undertaking the responsibility of providing financial

help for the development of the country’s commercial and industrial sector.

2.2 AN OVERVIEW OF THE BANK

Social Islami Bank Limited (SIBL) started its operation on the 22nd November, 1995

as a Second Generation Islamic Bank in close co operation and assistance of some

renowned personalities of the Islamic world. H.E. Dr. Hamid Al Gabid, Former

Secretary General of OIC & Prime Minister OF Niger, H.E. Dr. Abdulla Omer

Nasseef, Deputy Speaker of Saudi Shura Council & Ex-Secretary General of Rabeta

Al-Islami, H.E. Ahmed M. Salah Jamjoon, Former Commerce Minister of Saudi

Government, H.E. Prof. Dr. Ahmad El-Naggar (Egypt) participated to this noble

endeavor as sponsor shareholders, Targeting poverty, SOCIAL ISLAMI BANK LTD.

is indeed a concept of 21st century participated three sector banking model in one in

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the formal sector, it work as an Islamic participatory Commercial Bank with human

face approach to credit and banking on the pro t and loss sharing it is a Non- formal

banking informal finance and credit package that empowers and humanizes real poor

family and create local income opportunities and discourage internal migration; it is a

Development Bank intended to monetize the voluntary sector and management of

Waqf, Mosque properties and introducing cash Waqf system for the First time in the

history.

2.3 MEANING OF ISLAMIC BANKING

An Islamic Bank is a financial institution that operates with the objective to

implement and

Materialize the economic and financial principles of Islam in the banking arena.

Islamic banking refers to a system of banking or banking activity that is consistent

with the principles of Islamic

Law (Shariah) and its practical application through the development of Islamic

economics.

Shariah prohibits the payment of fees for the renting of money (Riba, Usury) for

specific terms, as well as investing in businesses that provide goods or services

considered contrary to its principles (Haraam, Forbidden). While these principles

were used as the basis for a flourishing economy in earlier times, it is only in the late

20th century that a number of Islamic banks were formed to apply these principles to

private or semi-private commercial institutions within the Muslim community.

The World Islamic Banking Conference held annually in Bahrain since 1994 is the

unique platform internationally recognized as the largest and most significant

gathering of Islamic banking and finance leaders in the world.

The Organization of Islamic Conference (OIC) defined an Islamic Bank as financial

institution whose statutes, rules and procedures expressly state its commitment to the

principles of Islamic Shariah and to the banning of the receipt and payment of interest

on any of its operations.

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According to Islami Banking Act 1983 of Malaysia, an Islamic Bank is a "company

which carries on Islamic Banking business. Islamic Banking business means banking

business whose aims and operations do not involve any element which is not approved

by the religion Islam."

2.4 JOURNEY WITH NEW LOGO

SIBL has changed its brand logo through a colorful function at Cox’s Bazar sea

beach. Bank has passed a successful year 2012 through generating highest business

growth in terms of profit amidst unfavorable market conditions and also set superior

service delivery for its customers through implementation of real time on line state of-

the-art banking technology. In its journey towards continuous excellence the bank has

decided to change its logo, the new logo depicts bird’s wing, 9(nine) feathers, to

represent its comfortable and safe flying in the economic sky by passing the territorial

Boundary. The wings are colored in red in a green background. Red symbolizes the

vigor and enthusiasm of youth and the green symbolizes love for the dear motherland,

Bangladesh is a country of greenery. Moreover 9(nine) feathers represent- Honesty,

Transparency, Efficiency, Accountability, Reliability, Innovation, Flexibility,

Security, and technology flying towards continuous excellence. In SIBL journey

towards Continuous Excellence it takes pride in their new Logo.

2.5 CORPORATE PROFIL

Social Islami Bank Limited (SIBL) was established in the year 1995 as a public limited

company which is engaged in Shariah based commercial banking in the country and its

modus-operandi are substantially different from other conventional banks. This is the

second-generation pioneer Islamic Bank in this country providing online banking facilities

to its customers.

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Name of the Company Social Islami Bank Limited

Legal Form Public Limited Company

Company Registration Number C-28763 (44)/95

Authorized Company Taka. 10,000,000,000

Paid up Capital Taka. 703,14,15,640

Registered Office City Center, Level 19, 20, 21& 22, 90/1 Motijheel C/A, Dhaka-1000

Phone: PABX 88 02 09612001122, FAX 88 02 9568098 Email: info@sibl-bd.com. Web: www.siblbd.com

SWIFT: SOIVBDDH

Tax Payer Identification No. 035-200-4971

VAT Registration No. 9011046380 Area Code-90101

Credit Rating Agency Emerging Credit Rating Limited

Auditors M/S Kazi Zahir Khan & Co. Chartered Accountants,

67/4, Pioneer Road, Kakrail, Dhaka-1000

Chairmen Major Dr. Md. Rezaual Hoque (Retd.)

Managing Director Md. Shafiqur Rahman

Company Secretary Md. Humayun Kabir, ACS

Chief Risk Officer Md. Yunus Ali

Chief Financial Officer Walid Mahmud Sobhani, FCMA

Number Of Employees 1922

Number Of Branches 111 (One Hundred Eleven)

Number Of Shares 70,31,41,564

Investor’s Enquiry Share Division City Center, Level-19, 90/1 Motijheel C/A, Dhaka-1000

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Phone: PABX 88 02 09612001122

SIBL Securities Limited (A Subsidiary Of SIBL)

Chief Executive Officer 3rd Floor, 15 Dilkusha C/A, Dhaka-1000

SIBL Investment Limited (A Subsidiary Of SIBL)

Managing Director 7th Floor, 68 Dilkusha C/A, Dhaka-1000

For Off Shore Banking Off Shore Banking Department 48 Kamal Attaturk Avenues, Banani, Dhaka-1213

Phone: PABX 88 02 09612001122

Listing Status (Shares) DSE (Dhaka Stock Exchange Limited)

Symbol SIBL, Listing Date: 18.11.2005

CSE (Chittagong Stock Exchange Limited)

Symbol SIBL, Listing Date: 04.10.2005

Market Price as on 31.12.2014

DSE Taka 13.60, Category A, CSE Taka 13.60, Category A

Table 1: Corporate Profile of SIBL

2.6 MISSION OF SIBL

• Establishing Three Banking Model

• Fast, accurate and satisfactory customer service.

• Balanced & sustainable growth strategy.

• Optimum return on shareholders’ equity

• Attract and retain high quality human resource.

• Empowering real poor families and create local income opportunities.

• Providing support for social benefit organizations-by way of mobilizing funds

and social services.

2.7 VISION OF SIBL

In SIBL journey towards continuous excellence it is striving to become the Country’s

leading Islamic Bank offering one-step service of an wide range of value added

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products and services meeting the needs of its customers; conducting its business

ethically in accordance with the laws of Shariah while optimizing best utilization of

the most modern state-of-the-art technological solutions through creation of a pro-

active organizational culture based on sound team spirit, fairness, mutual

understanding and pragmatic leadership always remain open to new ideas and

adaptable to the best practices in the market ensuring recognition and quality banking

experience to its customers and deliver best value to all its stakeholders as well.

2.8 SLOGAN OF SOCIAL ISLAMI BANK LIMITED

2.9 BRANCHES OF SOCIAL ISLAMI BANK LIMITED

To fulfill the commitment of serving the valuable customers at present, Social Islami

Bank Limited has been carrying their business through its 111 branches all over the

country and for the future they are growing their branches for serving all kinds of

people in our country, SIBL started their incorporation date was 05.07.1995 and

starting their 1st branches was 22.11.1995 (Principal Branch) and 50th branches was

Hathazari Branch opening 22.08.2010 and opening of 75th branch Basundhara at

27.12.2011 and opening of 100th branch Kankirhat at 28.12.2014

In all branch working hardly for loyalty people and they are opening 6, 25,000 nos. 0f

Deposit Account and 49,000 nos. of Investment Accounts in 30.12.2014

They are established their own Corporate Head Office at City Center 01.01.2012

and they are offering their Initial Public Offering (IPO) at 26.06.2000 and their 1st

Right Share is coming market at 23.07.2007

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So at Now Given bellow nos. of branch in Bangladesh: DHAKA DIVISION = 49

CHITTAGONG DIVISION = 33

SYLHET DIVISION = 4

KHULNA DIVISIOB = 12

RAJSAHI DIVISION = 8

BARISAL DIVISION = 1

RANGPUR DIVISION = 4

2.10 CORE VALUES OF SIBL

Figure 1: Core Value of SIBL

Honesty

Efficiency

Accountability

Transparency

Flexibility

Innovation

Religiousness

Security

Technology

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2.11 ETHICAL PRIENCIPLE OF SIBL

Objectivity

Just and Equitable

Impartiality

Personal Behaviors

Advertisement & Announcements

2.12 STRATEGIC OBJECTIVES

Introducing innovative Islamic banking product

To achieving global standards in Islamic banking

Ensure best CRS (Corporate Social Responsibilities) practices

Ensure Green banking

2.13 COMMITMENTS OF SIBL

To the Shariah

To the Regulators

To the Shareholders

To the Nation

To the Customers

To the Employees

To the Stakeholders

To the Environment

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2.14 FUNCTION OF SIBL

Figure 2: Function of SIBL

2.15 OVERALL OPERATION GOALS

The key thrusts of the operational goals are as follows:

• Empowering the family of the poor by creating income opportunities as well

as strengthening the family of the rich for a better future generation.

• Achieving sustainable participatory economy, Social Security, and peace for a

society.

Deposit procurement & management under Shariah principal

Financial service i.e. Letter of guarantee, money transfer etc.

Functions of Social Islami bank Limited

Corporate social responsibilities (CSR)

Investment using Islamic financial contract

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2.16 CORPORATE STRUCTURE

Table 2: Corporate Structure

Chairman

Managing Director

Additional Managing Director

Deputy Managing Director

Executive Vice Presidents

Senior Vice Presidents

Vice Presidents

Senior Assistance Vice Presidents

First Assistance Vice President

Senior Executive Officers

Executive Officers

Residency Officers

Senior Officers

Officers

Junior Officers

Assistant Officers

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2.17 DEPARTMENT OF SOCIAL ISLAMI BANK LIMITED

1. Information & Communication Technology

2. Financial Administration Division

3. International Division

4. General Services Division

5. Managing Director’s Secretariat

6. Business Development & Marketing Division

7. Audit & Inspection Division

8. Chairman’s Secretariat

9. Share Division

10. Board Secretariat

11. Human Resources Division

12. Shariah Board Secretariat

13. SIBL Training Institute

14. Non Formal &Voluntary Banking Division

15. Law & Recovery Division

16. Board Audit Cell

17. MIS, Planning & Research Division

18. Internal Control & Compliance Division

19.Investment Risk Management Division

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2.18 MANAGEMENT STRUCTURE OF SIBL

In 2007 Social Islami Bank Limited made their commendable in all business, like

deposits, credit, fund management, investment, foreign remittance, credit card and

foreign exchange related business. Bank has expanded business activities as holding

previously and parallels by diversification its investments to new products as a major

financier remarkable portion of total exports of the Country.

The Managements processes are as follows:

PLANNING:

The strategic planning approach in SIBL is top-down. Top managements formulate

strategy at the corporate level and it is transmitted through the division to the

individual objectives. In this process lower level manager are detached in making

process, even brainstorming of lower level manager is absent in decision making and

planning process.

ORGANIZING:

Organizing of the SIBL is based on Departmentalization. The organization is divided

into Nineteen department headed by Executive Vice President or Senior Vice

President. In the Limited the whole operation is centralization and authority is

delegated by written guidelines.

That guideline is:

1. Operational manual approved by Head Office

2. Advanced manual including advances limit for different management level

3. Bad and doubtful recovery manual

4. Code of conduct

5. Foreign banking guidelines

6. Central banking directives

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STAFFING:

Entry level recruitment process of the Social Islami Bank Limited is conducted in

their ways. For this reason they are staffing their staff with given circular or taken a

good person by given training in their institute. If they collecting their people with job

circular then they are joining Assistances Officer and after few years they are raise up

they are promotion.

CONTROLLING:

The bank has strict control its organizational activities. The Bangladesh Bank

directors indicate some control measures. Audits and inspection are conducted by

different parties to check whether the bank implement these control system properly

or not. The Central Bank conducts credit inspection by a team. Social Islami Bank

Limited has audit and inspection department to take controlling measures in internal

operations.

2.19 ISLAMIC BANKING DEVELOP IN BANGLADESH

Genesis of Islamic Banking in Bangladesh is the third largest Muslim country in the

world with around 160 million populations of which 90 percent are Muslim. The hope

and aspiration of the people to run banking system on the basis of Islamic principle

came into reality after the OIC recommendation at its Foreign Ministers meeting in

1978 at Senegal to develop a separate banking system of their own. After 5 years of

that declaration, in 1983, Bangladesh established its first Islamic bank. At present out

of 56 banks in Bangladesh, 8 full edged Islamic banks and 20 Islamic banking

branches of 10 conventional banks are working in the private sector on the basis of

Islamic Shariah. An Important development in Islamic banking in the last few years

has been the entry of some convectional banks in the market and their use of Islamic

modes of financing through their Islamic branches.

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Chart 1: Islamic banking develop in Bangladesh

2.20 ISLAMIC BANKING AROUND THE WORLD The twentieth century has witnessed a major shift of thinking in devising banking

policy and framework on the basis of Islamic Shariah. The establishment of the

Islamic Development Bank (IDB) in 1975 gave momentum to the Islamic Banking

movement. Currently about more than 300 Islamic Financial Institutes (IFIs) have

total combined assets exceeding $250 billion in more than 57 countries. It is projected

that this will be a U$ trillion industry. The Islamic financial market is estimated to

grow at annual rates averaging 15%.

Chart 2: Islamic Banking around the World

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2.21 CAPITAL PATTERN OF SIBL

Table 3: Capital Pattern of SIBL

Year

Declaration

No of Shares

Face

Value Per Share (Taka)

Cumulative

no of Shares

Value of

issued Capital for the year

(Taka)

Cumulative

value of Capital (Taka)

1995 Initial Capital 118,380 1,000 118,380 118,380,000 118,380,000 1996 - 118,380 118,380,000 1997 6.43% Bonus issue for the year

1996 7,620 1,000 126,000 7,620,000 126,000,000

1998 - - 126,000 - 126,000,000 1999 Right Share Issued 74,000 1,000 200,000 74,000,000 200,000,000

2000 Placement 50,000 1,000 250,000 50,000,000 250,000,000 Initial Public Offer 10,000 1,000 260,000 10,000,000 260,000,000

2001 20% Bonus Issue (Declared in the year 2004)

- - 260,000 - 260,000,000

2002 25% Bonus Issue (Declared in the year 2004)

- - 260,000 - 260,000,000

2003 50% Bonus Issue (Declared in the year 2004)

- - 260,000 - 260,000,000

2004 Bonus Issue (For the years 2001, 2002, 2003)

325,000 1,000 585,000 325,000,000 585,000,000

2005 - - 585,000 - 585,000,000 2006 - - 585,000 - 585,000,000 2007 1:1 Right Share 5,345,550 100 11,195,550 534,555,000 1,119,555,000

2008 17% Bonus Issue for the year 2007

1,903,243 100 13,098,793 190,324,300 1,309,879,300

2009 10% Bonus Issue for the year 2008

1,309,879 100 14,408,672 130,987,900 1,440,867,200

1:1 Right Share 12,508,587 100 26,917,259 1,250,858,700 2,691,725,900 2010 1:1% Bonus Issue for the year

2009 2,960,899 100 29,878,158 296,089,850 2,987,815,750

2011 14% Bonus Issue for the year 2010

41,829,420 10 340,610,995

418,294,200 3,406,109,950

1:1 Right Share 298,781,575 10 39,392,570 2,987,815,750 6,393,925,700

2012 10.50% Cash Dividend for the year 2011

- - - 6,393,925,700

2013 10% Bonus Issue and 5% Cash for the year 2012

63,748,994 10 637,489,940 7,031,415,640

2014 12% Cash Dividend for the year 2013

- - 7,031,415,640

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CHAPTER THREE: PRODUCTS AND SERVICE OF SOCIAL ISLAMI BANK LIMITED

3.1 FINANCIAL PRODUCT OF SIBL

3.2 GENERAL PRODUCT

3.3 INVESTMENT PRODUCT

3.4 INVESTMENT SYSTEM FOR IMPORT/EXPORT BUSINESS

AS PER ISLAMIC SHARIAH

3.5 HOW A LETTER OF CREDIT WORKS

3.6 SIGNIFICANT VARIANCE IN OPERATING RESULT

(QUARTERLY AND ANNUALLY)

3.7 FOREIGN EXCHANGE BUSINESS

3.8 SME PROGRAM OF SIBL

3.9 OPERATING RESULT & PROFIT

3.10 DOCUMENTATION

3.11 SERVICE OF SOCIAL ISLAMI BANK LIMITED

3.12 BILL COLLECTION

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3.1 FINANCIAL PRODUCT OF SIBL

In Social Islami Bank Limited there are many benefited product for fulfill their

customer satisfaction. They are using many ways to satisfy their customer to sell their

product but in present they are given a big ratio to customer for staying in market. So

given below their present product with trams and conditions:

Firstly I want to say that they are using their product a PRINCIPLE way for Deposit

Accounts.

3.1.1 PRINCIPAL

SIBL takes deposit (Amanat) under two basis principle of ISLAMIC SHARIAH

(Law). Those are:

I. Al-Wadiah Principle

II. Mudaraba Principle

I. Al-Wadiah Principle:

Literally Al-Wadiah means Al-Amanah (for easy understanding say like bailment)

with permission or authorization of the bailer (who offers Amanah) to the bailee (who

takes Amanah) to the effect that the bailee can use the things given as Amanah.

II. Mudaraba Principles:

Mudaraba means an arrangement in which a party participates in a venture with

his/her money and another with his/her efforts.

The deposit is accepted in the Mudaraba Account under unrestricted Mudaraba

Principles of Islamic Shariah and the accepted deposit is investment according to

Shariah permitted modes.

SIBL LTD. Is providing the following product and services:

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3.2 GENERAL PRODUCT

There are Three (3) types of product are providing:

01. Saving Account

02. Current Account

03. Short term Deposit

01. Saving Account:

A Saving Account is a deposit account held at a bank or other financial institution that

provides principal security and a modest interest rate.

02. Current Account:

The Current Account is an important indicator about an economy’s health. It is

defined as the sum of the balance of trade (goods and services exports less imports),

net income from abroad and net current transfers.

03. Short term Deposit:

A Short term Deposit is an amount of money deposited in a bank or financial

institution for no longer than a year.

3.2.1 DEPOSITS SCHEME

There are Four (4) types of scheme providing:

01. Mudaraba Education deposit scheme

02. Mudaraba Special deposit pension scheme

03. Mudaraba Lakhopati deposit Scheme

04. Mudaraba Double Benefit Deposit Scheme

But there are Nine (9) special deposit scheme providing now for customer,

01. Sonali Din Special deposit Scheme

02. Shamridhir Shopan Special Deposit Scheme

03. Shanchita Special Deposit Scheme

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04. Subarnalata Special Deposit Scheme

05. Subarna Rekha Special Deposit Scheme

06. Subuj Chaya Special Deposit Scheme

07. Shukher Thikana Special Scheme

08. Shachanda Protidin Special Scheme

09. Subuj Shayannaya Special Deposit Scheme

Terms and Conditions:

i. Account holder deposit for 3, 5.10 months.

ii. Monthly deposit 100-25000/- for this account.

iii. Depositor under shall get the specific share of minimum % of the distributable

Investment Income.

iv. Some special deposit account is just for woman.

v. Some account is open for senior citizenship people.

vi. Some special account only for working people like as Garments and Building.

In any case they are fall in injure, they found lone for medical cost.

vii. Depositor under the scheme shall deposit a fixed amount of tk 50,000/-and

above but multiple of tk 10,000 thereof for a period of 3 years.

3.2.2 SAVING SCHEME There are Ten (10) saving product is providing:

01. Al-Wadeeah Current Account

02. Mudaraba Saving Account

03. Mosque Waqf property Development Scheme

04. Cash Waqf Scheme

05. Mudaraba Bashsthan Saving Scheme

06. Mudaraba Hajj Saving Deposit (Kafela)

07. Mudaraba Millionaire Saving Scheme

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08. Mudaraba Marriage Saving Scheme

09. Mudaraba Mohorana Saving Scheme

10. Young Star Saving Account

Terms and Conditions:

i. The deposit is accepted in the Al-Wadiah Current Deposit (AWCD)

under Al-Wadiah Principles of Islamic Shariah. As per provisions of

Al-Wadiah Principles the bank is authorized to invest the deposited

money at the risk and for the sole benefit of the bank.

ii. The client is not entitled to get any share of the Investment income but

will get all sorts of concerned service provided by the bank.

iii. The Account can be opened in the name of minor by his guardian; the

instruction of operation should be clearly noted in the relative account

opening form and signature card.

iv. Depositor under MSD shall get the specific share of minimum % of the

distributable investment income

v. Profit shall be calculated on daily balanced basis but applied twice in a

year i.e. June and December.

vi. If the account holder fails to maintain the minimum balance

requirement, he/she will not get profit for the month

vii. The account holder can withdraw 20000/- two (2) times in week but

not more four (4) times in a month.

viii. In hajj time in this bank, they are deposit money for hajj.

ix. For our young generation they are start a new account for student, than

they are deposit any amount of money for their future.

3.2.3 TERM DEPOSIT There are three (3) terms deposit product is providing:

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01. Mudaraba Notice Deposit Account

02. Mudaraba Term Deposit Account

03. Mudaraba Monthly Profit Deposit Scheme

Terms and Conditions:

i. Depositor under MND shall get the specific share of minimum % of

the distributable Investment Income

ii. Profit shall be calculated on daily balanced basis but applied twice in a

year i.e. June and December.

iii. Seven (7) days prior notice is mandatory for withdrawing any amount

from MND A/C.

iv. Without showing any case, the bank preserves the right to close the

A/C providing 7 days prior notice.

v. Mudaraba term Deposit Account holders for 1, 3,6,12 months shall get

the specific share of minimum % of the distributable investment

income.

vi. MTDR will be auto renewed for the same period, if it is not encashed

within one (1) month after maturity.

vii. Profit shall be calculated on daily balance of deposit but applied at the

anniversary or maturity

viii. The depositors must preserve the receipts properly and carefully. In

case of loss or damage of the receipts, if depositors do not inform the

bank, the bank shall not be taking responsible for loss or damage.

ix. MTDR is not transferable instrument & as such it cannot be endorsed

in favour of others.

28

SIBL

3.2.4 CLIENT DEPOSIT

39833.37

56661.16

81091.3995984.82

109040.63

0

20000

40000

60000

80000

100000

120000

2010 2011 2012 2013 2014

Client Deposit (Taka in Million)

Chart 3: Client Deposit

3.2.5 COMPARATIVE DEPOSIT MIX Fig in millions Taka

Particulars Year-2014 Year-2013 Growth

Al-Wadeeah Current and Other Deposit

Accounts 13,059.52 12,198.62 7.06%

Mudaraba Savings Deposit 9,818.28 6,468.73 51.78% Mudaraba Term Deposit 75,356.41 62,746.87 20.10%

Other Mudaraba Deposit 26,201.53 20605.68 27.16%

Cash Waqf 99.28 84.58 17.38%

TOTAL 124,535.01 102104.48 21.97%

Table 4: Comparative Deposit Mix

SIBL

SIBL

SIBL

SIBL

SIBL

29

3.3 INVESTMENT PRODUCT Islamic banks do not directly deal in money. They run business with money. They

funds of Islamic banks are mainly invested in the following modes:

1. Mudaraba

2. Musharaka

3. Bai-Murabaha (Murabaha to the purchase orders)

4. Bai-Muajjal

5. Salam and Parallel Salam

6. Istisna and Parallel Istisna

7. Ijara

8. Ijarah Muntahia Bittamleek (Hire Purchase)

9. Hire Purchase Musharaka Mutanaqisa (HPMM)

10. Direct Investment

11. Investment Auctioning

12. Quard

13. Quard Hassan

Total describe is given below:

1. Mudaraba

Mudaraba is a shared venture between labour and capital. Here bank provides

with entire capital and the investment client conducts the business. The bank

provides of capital, s called Sahib-Al-Maal and the client is called Mudarib.

2. Musharaka

Musharaka means partnership business. Every partner has to provide more or

less equity funds in this partnership business.

3. Bai-Murabaha

Contractual buying and selling at a mark-up profit is called Murabaha.

30

4. Bai-Muajjal

“Bai-Muajjal” means sale for which payment is made at a future fixed date or

within a fixed period. In short, it is a sale on credit.

5. Salam and Parallel Salam

Salam means advance purchase. It is a mode of business under which the

buyer pays the price of the goods in advance on the condition that the goods

would be supplied /delivered at a particular future time. The seller supplies the

goods within the fixed time.

Parallel Salam

The following conditions are essential in the contract of Murabaha, Bai-

Muajjal and Salam. The respective contract must include the following aspects

regarding the goods:

• Number/ Quantity

• Quality

• Sample

• Price and Amount of profit

• Date of supply/ Time limit

• Place of supply

• Who will bear the cost of supply

• Timeframe for payment in case of Bai-Murabaha and Bai-Muajjal

6. Istisna and Parallel Istisna

A contract executed between a buyer and a seller under which the seller

pledge to manufacture and supply certain goods according to specification of

the buyer is called Istisna. Here, the person giving the order is called Mustasni,

31

the receiver of the order is called Sani and the goods manufactured as per

order is called Masuna.

Parallel Istisna

If it is not stipulated in the contract that the seller himself would produce/

provide the goods or service, then the seller can enter into another contract

with third party for getting the goods or services produced/ provided by the

third party such a contract is called Parallel Istisna.

7. Ijara

The mood under which any asset owned by the bank, by creation, acquirement

or building-up is rented out is called Ijara or Leasing.

8. Ijara Muntahia Bittamleek (High Purchase)

Under this mode, the bank purchases vehicles, machineries and instruments,

building, apartment etc. and allowed clients to use those on payment of fixed

rents in installments with the ultimate objective to sell the asset to the client at

the end of the rental period.

9. Hire-Purchase Musharaka Mutanaqisa (HPMM)

Hire-Purchase Musharaka Mutanaqisa means purchasing and acquiring

ownership by one party by sharing in equity and paying rents for the rest of

the equity held by the bank or other party.

10. Direct Investment

Under this mode, the bank cans under its full proprietorship conduct business

by directly investing in the industries, trading transports etc. in this case, the

profit/ loss fully goes to the bank.

11. Investment Auction

Selling by auction of those assets/ goods acquired the bank through direct

investment is called Investment Auctioning.

32

12. Quard

It is a mode to provide financial assistance/ loan with the stipulation to return

principal amount in the future without any increase thereon.

13. Quard Hassan

This is a benevolent loan that obliges a borrower to repay the leader the

principal amount borrowed on maturity. The borrower, however, has the

discretion to rework the leader for his loan by paying any amount over and

above the amount of the principal provided there will be no reference in this

regard.

In SIBL there are Two (2) important investment products for SIBL Employee and

Other Customer. Those are given bellow:

SIBL Employee House Building Investment Scheme

SME & Agricultural Finance

3.3.1 GENERAL INVESTMENT

36680.2853908.58

76024.9785922.33

107899.96

0

20000

40000

60000

80000

100000

120000

2010 2011 2012 2013 2014

General Investment (Taka in Millions)

Chart 5: General Investment

SIBL

SIBL

SIBL

SIBL

SIBL

33

3.3.2 INVESTMENT INCOME

Fig in millions Taka

Table 5: Investment Income

3.3.3 INCOME FROM INVESTMENT IN SHARES & SECURITIES

Throughout the year, the country observed the capital market as unsupported, faded

and lacking confidence of the investors irrespective of corporate and individual. SIBL

had an investment outstanding of Taka 7,823.73 millions in Quoted & Unquoted

Shares, Preference Shares, Bond and Government Security against Taka 8,538.18

million of 2013. This year earnings from this segment have been recorded as Taka

296.95 million against Taka 325.47 million in 2013. Despite of the massive fail of

capital market, the bank saved its portfolios successfully, however an amount of Taka

85.64 million has been decreased in fair value which was adjusted through profit &

loss account for the period 2014.

Investment Mode Year 2014 Year 2013 Growth

Mudaraba 252.39 475.91 -46.97%

Bai-Muzzal 7576.05 6895.60 9.87%

Hire purchase Shirkatul Meelk 2211.55 1802.28 2.71%

Musharaka 49.03 57.86 -15.26%

Bai-Salam 3.79 9.37 -59.52%

Quard against MTDR, Scheme & Other 886.72 1041.64 -14.87%

Inland document bill purchased 417.37 401.66 3.91%

Foreign document bill purchased 1059.87 1070.39 -0.98%

Profit on Ijarah 18.58 24.67 -24.71%

Other bank and NBFI’s 928.13 1367.36 -32.12%

Other investment (Card, Wakalat Fees etc.)

273.31 448.13 -39.01%

Profit on Mudaraba 266.46 34.55 671.29%

TOTAL 13943.26 13629.42 2.25%

34

The bank holds the major shares of these TWO subsidiary companies as mentioned

below:

Sl.No. Name of Subsidiary Companies % of holding of shares by the bank

01 SIBL Securities Ltd. 99.99%

02 SIBL Investment Ltd. 99.99%

Table 6: Income from Investment in Shares & Securities

3.3.4 INVESTMENT PLAN FOR 2015

The plan has been formulated keeping in view the national economic priorities and

aiming at diversification of the investment portfolio by size, sector, geographical

area, economic purpose and securities to bring in phases all sectors of the economy

and all types of economic activities and different economic strata of the society

within the fold of Bank's investment operations.

SIBL has declared 2015 as "Sustainability and Growth" and budgeted to reach

investment portfolio to Tk. 1, 35,000 Million starting from Taka 10, 7,899.96

million only and maximization of operating pro t will help us in achieving this goal.

To achieve the target SIBL is looking after the country's top business tiers to boost

the growth of the bank. Segment of these groups are Telecom Operators, Ready Made

Garments (RMG), Textiles, Pharmaceuticals, NBFI, MNCs etc. IRMD is always

ready to give a boost to the services to such companies to support the branches. With

high quality resources equipped with both operational and product expertise under a

competent management team, Investment Risk Management Division (IRMD) &

Investment Administration Division (IAD) is always ready to take the challenge of

tremendous growth of the investment portfolio. But under any circumstances, quality

of the investment portfolio or related risks like market risk, liquidity risk and

operational risk will be analyzed and subsequently, mitigated before investment

approval. IRMD (Investment Risk Management Division) is working to have

effective internal policies, systems and controls to identify measure, monitor and

control investment risk.

35

3.3.5 CLASSIFICATION COMPOSITION OF INVESTMENT OF THE BANK

Table 7: Classification Composition of Investment of the Bank

3.3.6 OUR FUTURE PLAN

SIBL has the plan to focus on the following areas of operation for promoting:

1) To popularize online banking.

2) To increase Internet, SMS & Mobile Banking.

3) To introduce video conferencing.

4) To increase efforts towards near paperless banking.

5) To promote tree plantation campaign

6) To promote green initiatives through advertisement in print/electronic media.

Status Provision Rate

2014 2013

Amount Composition Amount Composition

Unclassified investment

0.25%,1% & 2%

1,462.44 48.09% 1,065.64 38.42%

Special Mention Account

5% 0.27 0.01% 15.69 0.57%

Su-Standard investment

20% 25.18 0.83% 4.62 0.17%

Doubtful Investment

50% 567.15 18.65% 171.82 6.20%

Bad/Loss Investment

100% 986.21 32.42% 1,515.61 54.64%

Total 3,041.30 100.00% 2773.38 100.00%

36

7) To rationalize use of consumption of paper, water, electricity and utilities.

8) To reduce emission of carbon

9) To conserve environment.

10) To protect air/water pollution.

3.4 INVESTMENT SYSTEM FOR IMPORT/EXPORT BUSINESS AS PER ISLAMIC SHARIAH

3.4.1 IMPORT BUSINESS:

The Import business is broadly divided into the following three categories

I Import of Commercial goods

II Import of raw materials for production purpose

III Import of Capital /Machineries

The imports avail of investment facilities against all kinds of imports. But in case of

imports under category I and II, investments are made under the Shariah approved

Bai-Murabaha and Bai-Muajjal modes and in case of import under category III,

investment is made under the Shariah compliant mode of Hire Purchase under

Shirkatul Meelk (HPSM).

3.4.2 IMPORT OF GOODS UNDER BAI-MURABAHA MODE INVESTMENT

Bai-Murabaha

Bai-Murabaha is a contract between a buyer and a seller under which the seller sells

certain specific goods permissible under Islamic Shariah and Law of the land to the

buyer at a price determined by changing agreed profit, margin or make-up over the

cost price. In the import business, the importer provides an irrevocable letter of

authority to the bank to import specific goods on behalf of him (the client) from the

foreign seller and promises to buy the same form the bank. In this case, the bank is

37

designated as a consignee in the bill of lading and letter on the bank hands over the

same to the importer through endorsement i.e. the ownership of the goods is

transferred to the importer.

Some Important features of the Bai-Murabaha mode of Investment

A. The client (Buyer) requests the bank to purchase particular goods and

promises to purchase the same form the bank at a price fixed by charging

profit over the cost price.

B. Under the Bai-Murabaha mode of investment there is no scope to increase the

price once it is fixed.

C. After buying the goods, the bank has to bear all the risk until goods are

actually delivered to the client.

3.4.3 INVESTMENT IN IMPORTS BY ISLAMIC BANKS

In the import business, Bai-Murabaha investment is accomplished through a single

deal at the time of opening L/C, Bills and Shipment.

For Example:

I. Murabaha Import L/C

II. Murabaha Import Bills

III. Murabaha Post Import.

Murabaha Post Import (MPI)

The importers apply for investment facility against imported goods after shipment for

payment of the invoice values of the goods to the seller/supplier including custom

duty, VAT and other expenses. In such a case, Islamic banks allow a Bai-Murabaha

investment facility under single deal concept. It is so called as the Letter of Credit

(L/C). Bills and the handling of Post-Shipment are settled under one agreement while

opening the Letter of Credit (L/C) for importing the goods.

38

3.4.4 ACCOUNTING PROCEDURE FOR PURCHASE PRICE,

PROFIT AND SALE PRICE

a) Price payable to the supplier

b) Other expenses relater with purchase

i. Conveyance - TA/DA.

ii. Commission payable to the agents.

iii. The expenditures in connection with supplier’s payment

iv. Transportation cost up to the bank’s go down.

v. Transit Insurance and other expenses

vi. Go down rent salary of officials etc. incurred before sale of goods.

c) Additional expenses

i. Duty

ii. VAT

iii. License fee

iv. Commission for C&F agent etc.

d) Cost price or total value = a+b

e) Estimated profit/mark up profit (profit percentage on purchase/cost

price)

f) Sale price = c+d

g) The net Investment amount is determined after deduction of the down

payment (if any) form figure at “f” above.

39

3.4.5 IMPORT UNDER THE BAI-MUAJJAL MODE OF

INVESTMENT

The term Bai-Muajjal means “Deferred payment sale” or “Sale on Credit”

Under this mode of investment a contract is made between the buyer and seller for

buying and selling of goods approved by Islamic Shariah and Law of the land on the

stipulation to pay the agreed price at a specific future date or by fixed installments.

Some importance features of the Bai-Muajjal mode of investment

Most of the features of Bai-Muajjal are like accepting the following:

1. Bai-Muajjal sale is executed completely on deferred system

2. The sale price is determined adding the profit with cost price. It is not

necessary to disclose the cost price and the profit mark up separately to the

client. But in Bai-Murabaha, the cost price and the profit mark up ratios are to

be disclosed separately to the client.

3. The accounting procedure for imported goods under both the Bai-Muajjal and

Bai-Murabaha mode are alike. But so far as contract is concerned they are

different. Bai-Murabaha contract and Bai-Muajjal contract are executed for

imports under Bai-Murabaha and Bai-Muajjal modes respectively.

3.4.6 IMPORT UNDER DIMINISHING PROPRIETORSHIP

METHOD (HIRE PURCHASE UNDER SHIRKATUL MEELK-

HPSM)

Capital machineries and other re usable goods are imported under this mode. It

combines three modes:

o Rent (Ijara)

o Partnership (Shirkat)

o Buying and Selling

40

Some importance features of diminishing proprietorship method

(Hire Purchase under Shirkatul Meelk-HPSM)

1. The bank and the client invest their capital jointly through a contract called

Partnership (Shirkat)

2. The bank leases its portion at a certain rent

3. The bank sells its portion to the client on receipt of the price under this system.

3.4.7 IMPORT UNDER MUSHARAKA MODE OF INVESTMENT

Musharaka

Musharaka is a Shariah compliant mode of investment where in the bank and the

clients jointly provide the capital.

Some general features of Musharaka mode of investment

1. The Musharaka agreement shall clearly laid down the amount of capital

investment to be provided by the bank and the client and the profit/loss

sharing ratio as agreed between them.

2. The actual profit of the business is to be distributed between the bank and the

client as per the agreed ratio. But loss, if any, is to be borne by them as per

ratio of the capital.

3. The client shall properly maintain ledger, register, books of accounts etc. and

have to show those to any authorized person of the bank on demand.

4. For the success of client’s business the bank shall have the right to give any

decision and supervise the business activities.

3.4.8 FIXATION OF LIABILITY IN CASE OF LOSS

If loss is incurred after performing all duties and responsibilities as per agreement

then the loss would be borne by the bank and the client according to capital ratio. But

41

if the loss is incurred due to carelessness, negligence or breach of any condition by the

client, then the client would be liable to bear the loss.

3.4.9 IMPORT UNDER MUDARABA MODE OF INVESTMENT

Mudaraba

Under the Mudaraba mode of investment, the client or businessman or capital user

does not invest any capital. In this case, the bank alone invests all the required capital

and the entrepreneurs (the client) directly manage and look after the business.

Under this mode, the bank bears all the expenditures related to imports. In this case,

the bank supervises the use of capital, system of business operation and income of the

business etc. the clients maintains all the register, documents and accounts concerning

buying & selling of the goods.

In this case, profit, if any, is distributed between the bank and the client as per the

agreed ratio and loss is fully borne by the bank.

3.4.10 EXPORTS IN INVESTMENT

To accomplish exports process/order as per the terms and conditions of the Letter of

Credit (L/C) and the agreement executed between the seller and buyer, an exporter

needs financial and other banking facilities on urgent basis

An exporter needs financial facilities at two stages of export process, such as:

I. At pre shipment stage

II. At post shipment stage

Hence, financial facilities to export sector may be classified as:

I. Pre shipment Finance

II. Post shipment Finance

Financial assistance/facilities complying Shariah principle are provided at both the

stage of export process.

42

3.4.11 INVESTMENT AT PER SHIPMENT STAGE AS PER

ISLAMIC SHARIAH

An exporter needs various financial facilities till shipment of goods. Finance is

needed for procurement of raw materials and to meet transportation and other related

cost up to shipment.

Pre shipment facilities are generally provided for the following purposes:

1. To procure raw materials

2. To process the exportable goods

3. For transportation and packaging

4. For payment of insurance premium

5. For payment of water, electricity and gas bill etc.

6. For payment of freight of the ship

3.4.12 SHARIAH COMPLIANT MODES FOR PRE SHIPMENT

FINANCE

1. Back to Back Letter of Credit (Back to Back L/C)

Bank extends back to back letter of credit facility to exporters to

procure/import raw materials for producing/manufacturing exportable goods at

pre shipment stage under the mode of Bai-Muajjal. Initially, no financial

facility form the bank is required when the back to back L/C is opened.

2. Bai-Murabaha TR (Trust receipt)

To procure/purchase raw materials for executing export order the bank

provides investment facilities to the client under the mode of Murabaha TR.

43

3. Bai-Salam

Under the Bai-Salam mode of investment, payment is made in advance to

purchase the goods and the supplier makes promise to deliver the goods at a

future date.

Investment under Bai-Salam mode is made to meet other expenses of the

exporter excepting the manufacturing cost of exportable goods.

4. Musharaka

Pre shipment investment may be made under Musharaka mode of investment,

if there is any pre determined investment arrangement.

5. Post Shipment Investment

Bank provides post shipment facilities through negotiation (FBN) and

purchase of export bills. It normally negotiates or purchases the export

documents, if the documents/bills prepared by the exporter are found in

order/correct in all respect. The bank adjusts the liabilities against FBN/FBP

after receiving the export proceeds and earns exchange income from this. This

mode of investment is in compliance with the Islamic Shariah.

44

3.5 HOW A LETTER OF CREDIT WORKS

This is a way to work Letter of Credit. In SIBL used this system for import or export

investment. For the invest product L/C is very important for buyer and seller. So we

must to know about working process of Letter of Credit.

Figure 3: Letter Of Credit

BANGLADESH

IMPORTER MR.B

USA

EXPORTER MR.E

USA

HSBC NRGOTIATING

BINK

BANGLADESH

IMPORTER BANK SIBL

(PRINCIPAL BR.)

USA

STANDARD CHARTERED

BANK

ADVISING BANK

L/C USA

HABIB BANK REIMBUR BANK

A/C OF SIBL

DOCTS

DOCTS

L/C

DOCTS

REIMB CLAIM

DOCTS

45

3.6 SIGNIFICANT VARIANCE IN OPERATING RESULT

(QUARTERLY AND ANNUALLY)

Fig in millions Taka

SL No. Accounting Head 31.03.2014 30.06.2014 30.09.2014 31.12.2014

1 Investment Income

3,143.96

6,605.18

10,117.41

13,943.26

2 Profit paid on deposit 2,284.76 4,652.34 7,004.28 9,007.20

3 Net investment income 859.20 1,952.84 3,113.13 4,936.06

4 Income from investment 46.79 146.23 225.80 296.95

5 Commission, Exchange & Brokerage

291.12 654.46 975.94 1,188.38

6 Other operating Income 35.25 122.95 175.35 289.49

7 Total operating Income 1,232.36 2,876.48 4,490.22 6,710.88

8 Operating Expenses 548.29 1,291.13 1,962.41 2,746.60

9 Salaries & Allowance 334.30 716.29 1,193.22 1,665.17

10 Other operating expenses 213.99 574.84 769.19 1,081.43

11 Operating profit before provision

& taxes 684.07 1,585.35 2,527.81 3,964.28

Table 8: Significant Variance in Operating Result (Quarterly and Annually)

3.7 FOREIGN EXCHANGE BUSINESS

Foreign exchange business stood at Tk. 139910.00 million in 2014 against Tk.

132374.70 million in 2013, which is sharp increase of 16.32%. The breakup of this

foreign exchange business is as under

46

Fig in millions Taka

Table 9: Foreign Exchange Business

3.7.1 INTERNATIONAL TRADE FINANCING (EXPORT &

IMPORT)

One of the core activities of the bank is to facilitate International Trade through export

and import financing.

Over the last few years, the foreign trade financing of the bank has gained a stable

expansion. The bank has been achieving significant growth in both export and import

financing despite/since global financial turmoil and worldwide economic slowdown

since 2008. During the year, the foreign trade business of the bank has recorded a

significant growth of 16.32%. Import business Increased by 6.99% percent of which real

value was Taka 79024.20 million in 2014 from Taka 73,859.40 million in 2013. On the

other hand export business grew to Taka 53044.90 million in 2014 which is 2.45%

percent higher than the export of Taka 51,775.30 million in 2013.

The bank has 13 Authorized Dealer Branches well equipped with highly trained

professionals to meet different requirements of import and export based clients. The bank

Particulars

2006 2007 2008 2009 2010 2011 2012 2013 2014

Import 11791.00 13482.3 18343.80 22753.3 39459.50 68198.50 76985.60 73859.40 79024.20

Export 10714.00 9961.60 12674.30 14433.20 21372.20 34975.00 42712.20 51775.30 53044.90

Remittance 775.00 459.90 2341.10 1923.50 1099.40 5134.90 6822.10 6740.00 7839.90

Total 23280.00 23903.00 33363.20 39110.00 61931.00 108308.30 126519.90 132374.70 139910.00

47

was involved in financing import business in the field of capital machineries, industrial raw

materials, food grains (rice, wheat, sugar, dal, garlic, onion, spices), oil (soya bean, palm,

lubricant), motor vehicles, spare parts, garment accessories, sports items, perfumery items,

chemicals, milk food etc. whereas the export was conspicuous in the field of readymade

garments. The bank has been endeavoring to diversify its export financing in other fields

like leather, agricultural products, dry fish, PET Flakes, spare parts of ships etc.

In order to facilitate trade finance, establishing of 'Central Trade processing Unit (CTPU)'

was a timely decision and has changed the total process of foreign exchange business

through speed up of the service and business potential of SIBL. We have CTPU facilities

based in Dhaka and Chittagong

3.8 SME PROGRAM OF SIBL

Social Islami bank limited has been successfully operating small and medium

enterprise (SME) investment for all kind small and medium business.

Directors of SIBL and initiatives of the Management along with term effort:

SME Operation of the bank in 2014

20%

80%

SME & Agre Investment-21349.80

Other Investment- 87361.90

Chart 6: SME Program of SIBL

SME portfolio of the bank has been increasing significantly which is shown in the following graph and table

Fig in millions Taka

48

Fig in millions Taka

Table 10: SME Outstanding by Year

1703.54370

6868.8 7164.3

21399.8

0

5000

10000

15000

20000

25000

2010 2011 2012 2013 2014

SME Outstanding

Chart 7: SME Outstanding by Year

3.9 OPERATING RESULT & PROFIT

Total operating income of the bank as on 31st December 2014 stood at Tk. 6710.88

million against Tk.5479.29 million of the preceding year. The bank made an operation

profit of Tk. 3964.27 million in 2014 against Tk. 2894.06 million in 2013.

A summary of operating result of the bank as on 31st December 2014 Vis a Vis the

position as on 31.12.2013 is shown below:

Year SME Outstanding

2010 1703.50

2011 4370.00

2012 6868.80

2013 7164.30

2014 21399.80

49

Table 11: Operating Result Fig in millions Taka

Table 12: Operating Profit

3.10 DOCUMENTATION

3.10.1 ACCOUNT OPENING

The account holder must observe proper documentation formalities before opening an

account with the bank. Each account holder needs to submit the following:

i. National ID card / Photocopy of passport/chairman certificate.

PARTICULAR 2014 2013

Net investment income margin (NIM) 3.86% 3.68%

Return on assets 2.36% 1.67%

Return on equity 15.68% 11.01%

Earnings per share Tk. 2,71 Tk. 1.74

Particulars 2014 2013 Growth rate

Income on investment 13943.26 13629.42 2.30%

Profit paid to the depositors 9007.20 9706.87 -7.21%

Net investment income 4936.06 3922.55 25.84%

Commission, Exchange & other 1774.82 1556.74 14.01%

Total operating income 6710.88 5479.29 22.48%

Operating expenses 2746.61 2585.23 6.24%

Profit before provision 3964.27 2894.06 36.98%

Provision against investment & others

656.76 869.40 -24.46%

Profit before tax 3307.51 2024.66 63.36%

50

ii. 2 copies of passport size recent photograph attested by the introducer.

iii. Specimen signature card duly signed in presence of the manager or

authorized officer.

iv. A/C opening form duly filled in.

v. NID photograph and signature of the nominee(s), if any, duly attested

by the A/C Holder.

vi. Any other document required by the bank from time to time.

Additional documentation and formalities to be observed before opening the account

for the following entities

For Limited Company

i. Certified true copy of memorandum and articles of association.

ii. Certified true copy of certificate of incorporation.

iii. Certified copy of certificate of commencement of business (for public limited

company)

iv. Copy of the Resolution of the Board of Directors deciding to open account

with the Social Islami Bank Limited and authorizing specimen signatories for

operation of the Account duly attested by the Chair duly attested by the

chairperson / Managing director.

v. Trade license

vi. ETIN certificate

vii. VAT registration certificate & form.

viii. ERC and IRC (if export/import oriented)

51

For Partnership Enterprise

i. Updated trade license

ii. TIN certificate

iii. Certified copy of the constitution of the firm.

iv. Registered partnership deed/duty notarized partnership deed (in case of

unregistered Firm)

For Association/Club/Society/Charity etc

i. Minutes of the committee meeting deciding to open account with Social Islami

Bank Limited duly certified by the secretary and the Chairperson.

ii. Copy of laws and by laws / constitution duly attested by proper authority.

iii. A copy of the resolution of the committee authorizing specific signatories to

operate account.

iv. Certificate of registration (where applicable)

For Proprietorship Enterprise

i. Updated trade license

ii. ETin certificate

I/we declare that I/we/ are fully aware of the money laundering prevention act, and

anti-terrorism act and I/we shall not do any act / transaction in contravention of the

provisions of the said act . I have gone through the terms and conditions mentioned

above and understood them in entirety and undertake to abide by those terms and

conditions relating to the account. I /we also agree to be bound by such terms &

conditions as may be amended or supplemented from time to time.

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i. Mudaraba Cash Waqf Savings A/C

Clients can deposit any amount of money as Sandakan through this A/C

whenever he wants. However, client is not allowed to withdraw any short of

amount from this A/C.

ii. Mudaraba Zakat Savings Scheme (Proshanti)

Zakat is the third pillar out of five (5) basic pillars of Islam. SIBL has

introduced this scheme to encourage the client to pay Zakat in due time. Profit

will be given half yearly on daily balance. Under this scheme depositors can

deposit any amount in any working day .the scheme will run for unspecified

maturity period. Before December client can’t withdraw any amount from this

scheme but after December the client can pay for the client and spend the

Zakat amount as per the sector stated in the holly Quran but in this case it

should be mentioned in the A/C opening form. Alternatively the client can

withdraw the balance amount at Ramadan every year and pay Zakat.

iii. Mudaraba SIBL Young Star Account

This scheme has been designed to encourage the student for banking

operation. This scheme doesn’t require any minimum balance and it is charge

free. Profit will be given half yearly on daily balance.

iv. Mudaraba Shanchita Special Deposit Scheme

It is a special deposit scheme in which a depositor can make daily transaction.

The minimum balance required for this A/C is tk 25000 /- . Profit will be

given on daily balance.

v. Mudaraba Education Savings Scheme (Dipti)

To encourage education, SIBL introduced Mudaraba education savings

scheme. Under this scheme client will deposit a fixed amount of tk 25,000 /-

and above but multiple of tk 25,000/- thereof for a period of 3, 5 or 10 years

and after maturity client will be given the principal amount with profit.

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vi. Mudaraba Bashsthan Savings Scheme

This scheme is designed especially for the person who had a dream to be the

owner of a house/apartment. Under the scheme, client will deposit a fixed

installment on monthly basis of 5, 10 or 15 years and after maturity client will

be given the principal amount with profit.

3.10.2 ACCOUNT CLOSEING

By Banker

If any customer doesn’t maintain any transaction within six years and the A/C balance

becomes lower than the minimum balance, banker has the right to close an A/C.

By Customer If the customer wants to close his A/C, he writes an application to the manager urging

him to close his A/C. Different procedures are followed in cash of different types of

A/C to close. Fixed deposit A/C is closed after the termination of the period. Closing

process for current & savings A/C:

i. After receiving customer’s application the officer verifies the balance of the

A/C.

ii. He then calculates interest and other charges accumulated on the A/C.

iii. If it bears a credit balance, the officer writes advice voucher. He gives

necessary accounting entries post to accounts section.

iv. The balance is returned to the customer. And lastly the A/C is closed. But in

practice, normally the customers don’t close A/C willingly. At times,

customers don’t maintain any transaction for long time. Is this situation at

first, the A/C becomes dormant and ultimately it is closed by the bank

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3.11 SERVICE OF SOCIAL ISLAMI BANK LIMITED

In the SIBL, there have many service systems for customer needed. So given below

all services of Social Islami Bank Limited

There are Seventeen (17) categories Service in Social Islami Bank Limited:

1. Online banking

2. ATM 24/7

3. CARD (Local & Foreign)

4. Automated Cleaning

5. Electronic Fund Transfer

6. Mobile banking

7. Offshore banking

8. Centralized Trade Processing Service (CTPU)

9. Remittance

10. Locker

11. Student File

12. SWIFT

13. Capital Market Services through SIBL subsidiaries

14. Alternative Delivery Channel (ADC)

15. SMS Banking

16. IP Phone

17. Data Security

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Given below to introduce all service of Social Islami Bank Limited for knowing all

customers and other bank related people:

1. Online Banking

Online Transaction facilitates “Any Branch Banking” to all customers

meaning, customer is able to deposit or withdraw money from any branch of

SIBL nationwide. Any branch banking is a facility for our customer to operate

their accounts from any of our network branch.

2. ATM 24/7

SIBL’s customer have been enjoying 24/7 service through ATM located

around the country. The bank has undertaken some programs to expand its

ATM network through procurement of more proprietary ATM and joining

hands with the common platforms of ATM network.

3. CARD (Local & Foreign)

To provide advanced and enhanced banking facilities to our valued

customers SIBL has introduced both Debit & credit cards of VISA brand.

At present, we have the following categories of cards:

o VISA Islamic Debit Cards (Zameel)

o VISA Islamic Credit Cards (Local Card, Dual Currency Card)

o VISA Islamic Prepaid Cards (Gift Cards, Hajj Card, Travel Card)

4. Automated Cleaning

Bangladesh Automated Cleaning House (BACH) started its LIVE operation

on the 7th October 2010 for Bangladesh Automated Cheques Processing

System (BACPS) and 28th February 2011 for Bangladesh Electronic Fund

Transfer Network (BEFTN) in order to make quick remittance in the whole

Bangladesh.

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5. Electronic Fund Transfer

In 28th February 2011 Bangladesh Electronic Fund Transfer Network

(BEFTN) in order to make quick remittances in the whole Bangladesh. At

present, all the 100 branches of SIBL have participated in BACH by

which the remote branches now collect their cheques within 1 day and can

make payment to the customers very quickly.

6. Mobile banking

Mobile banking refers to the use of a Smartphone or other cellular device to

perform online banking task while away from your home computer, such as

monitoring account balances, transferring funds between accounts, bill

payments and locating ATM. For this reason SIBL now started this service for

their customers.

7. Offshore banking

Social Islami Bank Limited is operating offshore banking units as a

separate business unit under the rules and guidelines of Bangladesh Bank

defying the probability in the global financial market. SIBL OBU has

scored a sizeable profit in the first year of its operation. In the year 2014

the OBU has accumulated a net profit after tax Tk. 26.52 core against Tk.

3.81 Core in 2013.

8. Centralized Trade Processing Service (CTPU)

SIBL has established Centralized Trade Processing Service (CTPU) for

serving customers in a more effective and efficient way. For the branches

around Dhaka Division and Chittagong Division, two base stations have been

establishes at Foreign Exchange Branch, Dhaka and Agrabad Branch of

Chittagong respectively.

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9. Remittance

Foreign exchange business stood at Tk. 139910.00 million in 2014 against

Tk. 132374.70 million in 2013, which is sharp increase of 16.32%. In their

Remittance is earning Tk. 7839.90 in 2014.

10. Locker

SIBL Local Office Br is providing facility of locker service for the purpose of safeguarding the valuable property of customers. The person or the organization that has any account in bank branch can enjoy this service. They can keep their valuable assets in banker’s custody. Customers have right to look after with a key of their individual locker provided by bank. SIBL maintains the following types of lockers:

Large locker

Medium locker

Small locker

11. Student File

For the student there are deposit accounts for saving for their future. So there

are two types deposit for student:

Mudaraba Education Deposit Scheme

SIBL Young Star Account.

12. SWIFT

Society for Worldwide Interbank Financial Telecommunications Global

communication network that facilitates 24-hour secure international

exchange of payment instructions between banks, central banks,

multinational corporations, and major securities firms. A member owned

cooperative organized in 1977 under Belgium law, it now includes over 6,500

participating members from more than 180 countries which together process in

excess of a billion messages every year (about 300 million messages every

day)

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13. Capital Market Services through SIBL subsidiaries

Throughout the year, the country observed the capital market as unsupported,

faded and lacking confidence of the investors irrespective of corporate and

individual. SIBL had an investment outstanding of Taka 7,823.73 millions in

Quoted & Unquoted Shares, Preference Shares, Bond and Government

Security against Taka 8,538.18 million of 2013. This year earnings from this

segment have been recorded as Taka 296.95 million against Taka 325.47

million in 2013. Despite of the massive fail of capital market, the bank saved

its portfolios successfully, however an amount of Taka 85.64 million has

been decreased in fair value which was adjusted through profit & loss account

for the period 2014.

14. Alternative Delivery Channel (ADC)

Social Islami Bank Limited believes in keeping abreast with latest technology in order

to provide our customers with convenient and time saving solutions which ensure

banking transactions anytime and anywhere.

The Alternative Delivery Channel (ADC) Department of the bank is relentlessly

working hard for the development and integration of all technology based delivery

channels for the banking products and services. The departments also plans and ensures

smooth operation of service delivery though ATM’s, CDMs, Web systems, SMS and

mobile phones etc. and enhance areas of delivery of customized services through these

channels. The Department ensures the operation of inland remittance service using all

delivery channels and also ensures quick and secure delivery of foreign remittance as

well using as much delivery channels as necessary to make local and foreign

remittance payments attractive, useful and popular.

15. SMS Banking

SMS Banking is a mobile technology that allows customer to request and receive

banking information from bank on customer mobile phone via Short Message Service

(SMS). Individuals or corporate bodies can manage their Bank Accounts, check their

account balances and last few transactions (Mini Statement) using their mobile phones.

Customers can also have SMS alert/ notification for any financial transaction done on

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their account as well as activate their Debit / Credit Card through SMS. The Bank has

recently signed Memorandum of Understanding (MOU) with Semicon Private Limited to

provide SMS Banking services to its customers.

16. IP Phone

"Connecting People with a Single Click"

SIBL believes that modern communication devices are the best option to minimize the

communication cost and allow the bank to build effective relationship with its clients

and staffs. The bank has recently installed IP PHONE solution which simple’s voice &

video communications at branches and at head of office level for all. These solutions

have minimized the communication cost in one hand and surprisingly enhanced the

means of effective communication system of the bank on the other hand.

17. Data Security

A 24 hours dedicated surveillance team is working to ensure the data security of the bank.

Maximum security layers are in place while transacting in Core banking System, Internet

Banking (IB) transactions, SMS banking etc.

3.12 BILL COLLECTION

In modern banking mechanism has become complex as far as smooth transaction and

safety is concerned. Customer does pay and received bill from their counterpart as a

result of transaction. Commercial bank’s duty is to collect bills on behalf of their

customer.

Types of bills for collection:

a. Outward bills for collection (OBC)

b. Inward bills for collection (IBC)

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A. Outward bills for collection

OBC exists with different branches of different banks outside the local clearing

house. Normally two types of OBC

i. OBC with different branches of other bank

ii. OBC with different branches of the same bank

B. Inward bill for collection

When the banks collect bills as an agent of the collection branch, the system is

known as IBC. In this case, the bank will work as an agent of the collection bank.

The branch receives a forwarding letter and the bill.

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CHAPTER FOUR: CRITICAL ANALYSIS OF

SOCIAL ISLAMI BANK LIMITED

4.1 SIBL SWOT ANALYSIS

4.2 MARKETING MIX

4.3 CUSTOMER SATISFACTION

4.4 TARGET CUSTOMERS

4.5 PEST ANALYSIS

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4.1 SIBL SWOT ANALYSIS

Figure 4: SIBL SWOT Analysis

Strength:

Strength means the positive internal factor that a company can use to accomplish it

mission, goals, & objectives. They might include:

Customer satisfaction

Service quality

Price effectiveness

Special skill & knowledge

Positive public image

Weakness:

Weakness means the negative internal factors that inhibit or restrict the

accomplishment of company’s mission goal & objectives. They might include:

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Market share

Shortage of skill work force

SIBL has lack of ATM booth

Opportunity:

Opportunities are the external option that a firm can exploit to accomplish its

mission. They might include:

Sales force effectiveness

Customer retention

Innovation effectiveness

Threat:

Threats are negative external forces that restrict a company’s ability to achieve its

mission, goal, & objectives. Threat to the business can take variety type of forms such

as:

Promotion effectiveness

Competitors entering the market

Economic recession

Technological advantages

4.2 MARKETING MIX

Product: Product means customer solution. SIBL introduces some products for their

respective customers

Price: Price means customer cost for the products. SIBL’s pricing system is also

satisfactory.

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Place: Place means convenience. Its channels, coverage’s is also satisfactory.

Promotion: Promotion refers to communication. There is a lacking for the

advertisement activities.

4.3 CUSTOMER SATISFACTION

Customer satisfaction is the extent to which a product or service’s perceived

performance matches a buyer’s expectations. If the product or service’s performance

falls short of expectations, the buyer is dissatisfied. If performance matches or

exceeds expectations, the buyer is satisfied or delighted.

Expectations are based on customers past buying experiences, the opinion of friends

and associates, and marketer and competitor information and promises. Marketer must

be careful to set the right level of expectations. If they set expectations too low, they

may satisfy those who buy but fail to attract enough buyers. In contrast, if they raise

expectations too high buyers are likely to be disappointed. Dissatisfaction can arise

either from a decrease in product and service quality or from an increase in customer

expectations. In either case, it presents an opportunity for companies that can deliver

superior customer value and satisfaction.

Today’s most successful companies are rising expectations—and delivering quality

product. Such companies track their customers’ expectations, perceived company

performance, and customer satisfaction. Highly satisfied customers produce several

benefits for the company. Satisfied customers are fewer prices sensitive, remain

customers for a longer period, and talk favorably to others about the company and its

products & services.

4.4 TARGET CUSTOMERS

The bank has a clear idea about the customers it wants to serve. Without fulfill their

needs the bank has no functions. So to collect the target customer’s banks can run

properly.

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Market Segmentation-

The process of dividing a market into distinct groups of buyers with different needs,

characteristics or behavior

Target Marketing-

The process of evaluating each market segments, attractiveness and selecting one or

more segments to enter.

Market Positioning-

Occupying a clear, distinctive and desirable place relative to competing products in

the minds of target customers

4.5 PEST ANALYSIS

We know that a scan of the external macro-environment is which the firm operates

can be expressed in terms of following factors:

1. Political

2. Economic

3. Social

4. Technological

SIBL considers the PEST analysis very important to understand better the local

environment before beginning the marketing process. SIBL’s environmental analysis

is a continuous process.

SIBL‘s environment is made up from The internal environment, internal customer

like, office technology, wages and finance etc. The micro environment, political and

legal forces, economic forces, socio cultural forces and technology forces, these are

known as PEST factors.

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POLITICAL FACTORS:

The political arena has a huge influence upon the regulation of SIBL’s businesses. We

can consider the following aspects:

1. The political environment is not stable, so as the banking sector. Through the

business activity is wholly regulated by Bangladesh Bank.

2. Government policy influence laws that regulate SIBL’s business.

3. The government’s position on marketing ethics, culture & religion is totally

based on customers & culture of Bangladesh.

ECONOMICAL FACTORS:

SIBL considers the state of a trading economy in the short and long terms. The

interest tares for various accounts are quite attractive. The bank also invests a huge

portion of money to the T-bill market. The level of influence also affects the business

values in Bangladesh. Through as being a fore bank it can adjust that inflation very

easily.

SOCIAL FACTORS:

SIBL considers the social and culture factors considerably. Like as

1. It thinks about the principle religion of the country and gives its employees the

best possible benefit for that.

2. The attitudes towards other products and services of other competitive banks

are marked specifically. They try to update their system & procedure in a

standard manner.

3. Our mother tongue is Bangla. I saw the top level managers are converse with

one another in Bengali.

4. SIBL knows that, the people of Bangladesh are very emotional in nature. So, it

tries to adopt that emotion in their business for better understanding the local

customer.

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TECHNOLOGICAL FACTORS:

Technology is vital for completive advantage and is a major driver of globalization.

SIBL allows a better technology for its products and service to be made more cheaply

and to a better standard of quality to the customer. These technologies offer

consumers and business more innovative product and services such as ATM machine.

SIBL offers its customers to a new way to communicate with consumers e.g.

Customer Relationship Management (CRM) etc.

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CHAPTER FIVE: FINDING, RECOMMENDATION AND CONCLUSION

5.1 FINDING OF THE REPORT

5.2 RECOMMENDATION

5.3 CONCLUSION

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5.1 FINDING OF THE REPORT

After analyzing the annual report and other collecting information and other papers of

evaluation of performance analysis and on the basis of my study I have got some

finding about Social Islami Bank Limited.

These are mentioned below:

SIBL is the pioneer of private sector banking business in Bangladesh. As a

result it has a huge branch operation that causing employment opportunity.

The fund management system is very effective for keeping the system

effective.

Necessary change in credit policy, loan and advance policy, provision.

The officers engaged in loan management are very much aware in choosing

right person to provide loan to ensure its recovery.

The top management is more conscious about the liquidity of bank.

The top management gives its highest attention in the operation of fund

management.

The customer services is very much impressive than other financial institution.

Top management guidance to its subordinates is very much friendly.

The overall working environment of the office is very nice.

Lack of professional data entry operators.

Not a proper skilled human resource in every department.

Inadequate workforce in new branches. One is required to do two or three

departments work.

Inadequate facilities in maintaining the operation of ATM card, master card,

and visa card etc.

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5.2 RECOMMENDATION

I have some points to focus which will help the bank to improve the efficiency as well

as the quality of work. The points are as follows:

1. Management should set proper planning for its operations of each and every

work for the whole bank as well as branches of SIBL.

2. Management must design the jobs on priority basis.

3. As the top management has decided to start online banking system, necessary

steps should be taken to make this decision implement as soon as possible.

4. As SIBL is a service providing organization, it should introduce new and

dynamic service to serve the people and capture the target market.

5. It is necessary to assign required qualified manpower for every job.

6. The proper managerial observation and cooperation are required.

7. All branches should properly maintain all documents n daily basis.

8. It must avoid the duplication of the work through better communication.

9. It also tries to avoid duplication in any case through accuracy and efficiency.

10. It is required to develop same effective motivational programs.

11. Top management must ensure the proper implication of it in all branches.

12. And most of all ensure proper communication with head office and other

branches.

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5.3 CONCLUSION

I acknowledge different banking functions and day to day banking operation on my

way to complete this internship. From my starting day to up to date my practical

implementation of customer dealing procedure during the whole period practical

orientation in SIBL at Halishahar branch, Chittagong. I have to try my best to reach a

firm and concrete a conclusion very confident way. In this report I have explained my

best in respect of my real life experience gathered from different departments believe

that my realization will be in harmony with most of the banking thinkers. Now a day

banking sector is more competitive. To achieve a proper reward about performance, it

is essential to satisfy its customer by providing them different valuable and dynamic

services. Because a satisfied customer will take to others about the service those he or

she is very justifiable enjoying and satisfied customers. People depend on the people

is the mode of human civilization. Therefore the importance to satisfy customer is

increasing day by day in the private commercial sector especially in the private banks.

As all the activities those are required to provide valuable services to its customers to

make them satisfy, are related with the fund management system, SIBL is also much

careful about its fund management. SIBL always gives its highest attention in

monitoring and managing the bank fund, which is consists of fund, capital, reserve,

deposits loan and advance. At present SIBL is successful in effectively and efficiently

managing these vital issues. In spite of that, in order to keep its success continue and

reach at the pinnacle of success it, its managers, board of directors, and employs must

have the comprehensive and clear idea about the reserve, fund, loan, capital, deposits,

and liquidity regarding the smooth control of bank and continue its vital operation

toward country’s economic development.